Lord Tanlaw: My Lords, I beg to move that this Bill be now read a second time.
	I thank the Government most sincerely for allowing me time to present this Bill, and I thank those Members who put their names down to speak on it. It is rather a daunting experience launching a Bill on one's own, and I could not have done it without the help of the Public Bill Office, Nick Besly, and my researcher Andrew Trotter. Thanks to all who responded to my survey. I sent it because I felt that as a Member of your Lordships' House, not having a constituency, I should do my best by circulating it to as many politicians as I could. I circulated it to 1,500 politicians, including all Members of this House, the place next door and also the Members of the devolved Parliament and Assemblies.
	I shall just remind people, because it sometimes is confusing, what this Bill is all about. Primarily, it is to find out how to make the best use of the limited number of hours of daylight in winter. It creates a three-year experiment of single/double summer time—SDST as it is called—starting from 29 October this year. That means that there would be lighter evenings rather than lighter mornings during this period. When we advance the clocks at the weekend, we will experience the lighter afternoons and evenings proposed for the winter months of the experimental period. Noble Lords will appreciate that we will get some idea of it after this weekend. This time next year, on the last Sunday of March 2007, the clocks will be advanced one further hour to double British Summer Time. The time will then be in harmony with Central European Time. On the last Sunday in October 2007, the clocks will go back one hour, as will all the clocks in Europe, except in Portugal and the Irish Republic.
	Under the Bill, the devolved bodies can decide whether they want to participate in the experiment of single/double summer time. I have allowed for that so that the northern latitudes of the local electorates and the shortness of the winter days can be taken into consideration. On completion of the experiment, the government of the day should have collected enough data from all the interested parties, including the general public, to decide whether to continue with lighter evenings or to return to the present status quo of lighter mornings, which was agreed in 1972.
	There have been a number of Bills like this one, and I am nervous about wearying the House with yet another on the subject. It is the Road Safety Bill that has driven me to put this Bill before your Lordships. The Royal Society for the Prevention of Accidents—RoSPA—confirms the conclusion with the results of their 2002 survey, that this Bill, during the period of lighter evenings, will save at least 100 lives on the roads every year. No doubt the noble Baroness, Lady Billingham, and the noble Lord, Lord Faulkner, who are office-bearers in that association, will be able to confirm that more officially than I can.
	Nevertheless, a number of people have written to me and have appeared on talkback radio programmes. They are worried about the safety factor with a lighter morning school run, which they feel must be superior to a darker morning school run. However, the facts are clear, and were stated in a debate in the House of Commons on the British Time (Extra Daylight) Bill in 1996:
	"Only 18 per cent. of all accidents involving schoolchildren occur on the journey to or from school. Some 82 per cent. of accidents occur after school".—[Official Report, Commons, 19/1/96; col. 992.]
	That is an essential factor that we must remember throughout the debate. It is an unnecessary worry for those people who think that darker mornings are going to mean more accidents; statistics say otherwise.
	In addition to concerns over road safety, I have received submissions from many differing interests who advocate a change from the status quo of lighter mornings. They fall loosely under the heading, "quality of life", and range from walking the dog in daylight, to deterring early evening crime, to saving more than £1 billion a year through increased tourism, due to an extended season. Does the Minister who is to reply not agree that lighter evenings will also allow schoolchildren to boot a ball about before visiting the chip shop or slumping in front of the family television?
	British Association of Leisure Parks, Piers and Attractions (BALPPA) and similar bodies involved with leisure and sports pastimes, have said that they would strongly support the experiment proposed in the Bill. In my view, there is a good possibility that the adoption of SDST for an experimental period will save energy and make a positive contribution to the carbon emissions equation. On 26 January, the Minister for Science and Technology in the debate of my noble friend Lord Montgomery of Alamein disagreed and quoted the Building Research Establishment's absurd and unproven assertion that energy use would increase under SDST due to,
	"people leaving lights on all day".—[Official Report, 26/1/06; col. 1384.]
	My wife says that I am always leaving the bathroom lights on, but I do not think that all of the people will leave all of the lights on all day to the extent that it would not save energy.
	Let us not forget that the father of daylight saving was Benjamin Franklin. He calculated in 1784 that Parisians burned 127 million candles unnecessarily every year, because they did not change their clocks. He proposed a form of daylight saving for that city and suggested that there should be a tax,
	"on every window with shutters to keep out the light of the early morning sun".
	Is the Minister aware also that in 1909, William Willett, who was the great-great grandfather of the popular singer Chris Martin of Coldplay, drafted Bills for Parliament's acceptance proposing daylight saving in this country as a means of conserving energy? He did not succeed, but Daylight Saving Time was adopted in the Summer Time Act of 1916—a year after his death. That Act was designed principally to save coal during the First World War and was followed by the Summer Time Act 1925.
	The Policy Studies Institute's Making the most of daylight hours was put forward by the noble Baroness, Lady Thatcher, when she was Prime Minister. She was convinced that it could lead to great energy savings. Former Prime Minister Edward Heath introduced the Summer Time Act 1972, which was well-intended, but seriously mistaken, but gave us today's status quo.
	I do not know what noble Lords opposite believe, but they are keen on "green" matters these days, so perhaps they would look at this Bill with a view to incorporating its proposals in a future manifesto. Why did the Minister of Science of Technology not mention during my noble friend's debate the California Energy Commission's detailed study of the effects of daylight saving on electricity use? Is he not aware that the commission concluded that there would be savings of,
	"hundreds of millions of dollars because it would shift electricity use to low demand, (cheaper) morning hours and decrease electricity use during the higher demand hours"?
	If that applies in California—and it is a detailed study which I commend the Minister to read—is there any good reason why the same kind of savings cannot be made here, especially as there is not the same demand for air conditioning during the summer.
	The application of SDST in this country would have the added bonus of harmonising with Central European Time (CET). I would have thought that the proposed experiment would be of benefit to the travel and communication industries as well as to the City of London. Yet again, the Minister seemed to disagree with that concept in his statement at the close of my noble friend's debate.
	It has been suggested to me in a number of letters received regarding the Bill that there could be problems with rescheduling planes and trains in order to adapt to the new timings during the experimental period. Initially, yes, of course, there would be; but once in place there would surely be less rescheduling if our clocks and travel schedules were in harmony with those in Europe—which they are not at present. There is also the added benefit that the present early morning flights over London and into Heathrow as early as 4.30 am would switch to arriving at 5.30 am under single/double time schedules. Surely no one could object to that.
	While I appreciate that in general there could be strong support for lighter evenings, as indeed there is for lighter mornings, it should be remembered that the Bill will prove effectively one way or the other which is the best, by actual experience of single/double summer time. The experiment proposed in the Bill should provide enough data for the Government to decide which is best for the quality of life for the local population in different parts of the country and what effect it has on the overall demands on electricity throughout the year.
	A Bill of this kind is bound to raise the tiresome West Lothian question. I have therefore split up the plan so that the devolved governments have a choice. What will the Westminster Members of those devolved areas—Scotland, Wales and Northern Ireland—do? A briefing note that I sent to noble Lords showed how population distribution related to latitude in the United Kingdom and how that would be affected by the lighter evenings experiment. One should note that Westminster MPs, who represent English constituencies and 84 per cent of the population, will have only one chance, if your Lordships allow this Bill to pass to the other place, to ensure that the Bill reaches the statute book; whereas Westminster MPs with Scottish constituencies, who represent less than 9 per cent of the population, can seriously affect the English vote unless they abstain. That point has been raised time and again concerning other Bills. They have no right to vote on a matter that denies their constituents the choice that they may have at home.
	I took part in a radio discussion with a Scottish nationalist MP who made it clear to me that the Scottish nationalists would be very happy under my Bill to carry on with the status quo and not adapt to single/double summer time. That is a legitimate political position. They only thing that they need to check is that the people of Scotland who elected them actually want that. I am not so sure, but perhaps I am not in as good a position to judge as they are. So there is no problem with the Scottish National Party which would be happy with a change of time at the Border.
	It has been difficult for the Secretary of State for Northern Ireland to have contact with Northern Ireland MPs. That problem must be resolved, because it is difficult to get feedback. Therefore, I will only surmise that if the people of Northern Ireland accepted my Bill and accepted single/double summer time, the Republic of Ireland might reconsider its position about keeping Western European Time. It should be looked at carefully. As I said, those areas would have a choice, as would Welsh MPs, although, latitudinally, the matter is not so important to them.
	Someone is always bound to raise the question of Portugal. How has that country managed to remain in Western European Time as a good example of not falling in line with Central European Time? Let us not forget that Portugal did not do that to save daylight. Lisbon is at latitude 37 degrees north and its citizens enjoy at least 10.5 hours of brilliant daylight during the Christmas period, so they do not need daylight saving. I believe the reason Portugal stays in Western European Time has something to do with working hours but nothing to do with daylight saving.
	Portugal has a long border with Spain. More than a million people every year cross that border. They have no problems with altering their watches, and it does not appear to affect the economy or tourism. People all over the world are quite used to changing their watches, as we do as soon as we get on to a plane, so I do not think that that is a problem. To people who promulgate Portugal, I say, "What about Gibraltar?". If anywhere should be on Western European Time in harmony with a mother country, it should be Gibraltar, but it is not. I wonder why.
	I return to the survey, the results of which I promised to give. I mentioned how many people were covered by the survey, but the returns indicate a clear majority in support of the experiment proposed under the Bill. That is a different result from the one given by the noble Lord, Lord Sainsbury. He seemed to give the impression that the country does not wish to change, but he has not given any statistics for that conclusion and I should be most interested to know on what basis he makes that very broad statement.
	The returns of my survey reflect the results of a similar MORI poll, which was instigated by the Mayor of London last year and was conducted simultaneously in London and Scotland. I have the facts here, but where is the Minister getting his facts from? I have been preparing for this Bill for two months since its First Reading, and I am not getting a massive "no" from any part of the country. As a matter of interest, of the Peers who responded, 74 per cent agreed with the proposed experiment, only 20 per cent disagreed and 6 per cent were not sure. Sixty-two per cent of the MPs to whom I wrote agreed with the proposed experiment, 24 disagreed and 14 per cent were not sure. I shall not trouble noble Lords with endless statistics but, of the whole lot, including the devolved Assemblymen and so on, 60 per cent were in agreement with the experiment proposed under the Bill, 33 per cent disagreed and 7 per cent were not sure.
	Statistics are malleable but, from the Mayor's MORI poll and from the simple poll that I conducted using a reputable outside agency at my own cost, there was no overwhelming view that people do not want to change from the status quo. One of us is wrong, so the Minister must come up with statistics or something to shore up his view that the majority in this country is against any form of change. We all know that the party managers are against change, but they do not represent the country. I hope that the time has come when politicians and party managers will not be listened to on this issue, which affects everyone's quality of life. Either I have this terribly wrong or the Government have, and the point of my Bill is to find out what happens when we switch to single/double summer time.
	I shall take what the Minister said bit by bit. He mentioned that traditionally there has been slight resistance to a change from the hill farming community, mainly in Scotland. I have been the proprietor of a hill farm since 1965 and have found that that is not true. Can the Minister specify how hill farmers will be adversely affected by single/double summer time, bearing in mind that the feeding of all farm animals is dependent on their circadian rhythm of night and day and not on the chimes of Big Ben?
	I remember that in 1968 the forestry and building workers did indeed have to wait for the sun to rise, and they sat around in vans reading papers until things got going. But, today, the timber extractors use floodlights in the early morning and at night to get the job done. I speak from the experience of my own declared interests in the civil engineering and railway engineering industries, where my people undertake work in the dark while most people are asleep in their beds. It is often difficult and dangerous work involving high voltages and the constant passage of high-speed traffic; nevertheless, darkness is not a problem. Floodlights, proper equipment and reflective clothing have made it a very minor problem.
	I find it incredible that the Minister is using postmen and milkmen as examples of people who would be affected by dark mornings. When did the Minister last hear the sound of his mail plopping on to the doormat before the sun had risen? We are getting single deliveries these days, and it seems to me that the mail often arrives long after the sun has risen over the yard-arm rather than over the horizon. When did the noble Lord last hear the clatter of milk bottles on the doorstep with the unmistakable whine of the departing milk float? I am sure he would be the first to agree that the supermarkets brought about the demise of milkmen, so why does he think that milkmen will be affected by my Bill in their retirement?
	To start enjoying the lighter evenings of summer time, we happily advance our clocks by one hour. But what will happen in autumn if we have to turn them back again because the Government stop the Lighter Evenings (Experiment) Bill from reaching the statute book? All of us who are part of the political spectrum will be indirectly responsible for at least 100 unnecessary road deaths next year, just as we have been every year since the lighter evenings experiment was terminated in 1972 by the House of Commons.
	I hope that the Bill will proceed from this House to the other place, where lighter evenings can be reconsidered on the results of the experiment and then legislated as the new status quo. If the Government are not prepared to look upon an experiment intended to improve the quality of life for all of us, they must give a reason which everyone can understand and pass judgment on at the next general election. I commend the Bill to the House.
	Moved, That the Bill be now read a second time.—(Lord Tanlaw.)

Baroness Billingham: My Lords, it falls to me to give my sincere thanks to the noble Lord, Lord Tanlaw, for the outstanding work that he has already done on the Bill and for the way in which he has laid out before us today the issues that we have to address both here in this Chamber and further afield. This is my first opportunity to speak on the Bill. It has not come before Parliament since I have been in the House, but I could not be more enthusiastic about any Bill to come before Parliament during my time here. I am certain that the proposals before us today are absolutely and totally right, so let me, so to speak, put my cards on the table here and now.
	We have the opportunity to do two enormously important things: we could lift the morale of the entire nation, probably avoiding the debilitating condition of mental depression for thousands of people; and we could help to create a healthier, more active lifestyle, both for children and adults, which will combat the national scourge of obesity. And what is to stop us? Myths and prejudice—the twin scoundrels which threaten to hold a nation to ransom.
	I shall put my case simply. At a point in the calendar—the autumn—when clocks are about to be turned back, we all have the rueful regret that summer has passed, autumn is here and winter is round the corner. The days are shorter and nights are longer. And just as we enter this naturally low period in our national morale, what do we do? We turn the clock back a whole hour and turn a naturally unhappy syndrome into a disaster.
	This self-inflicted pain affects thousands of people with varying degrees of depression and condemns us to five months of unnaturally deepened gloom. It also robs our children—in my case, my grandchildren—of the priceless, post-school day opportunity of charging around the park, sliding down the slide, kicking or hitting a ball and, in general, letting off steam. From October onwards, we invite—no, we force—them into a sedentary state—couch potatoes, or whatever. But we are responsible and, frankly, it is unforgivable. All that comes at a moment in time when doctors and health experts have at last convinced us that we are in danger of becoming a clinically obese nation and that the antidote is a better diet linked to more exercise. To what other national health epidemic do we have such a simple remedy?
	What can possibly stop us from doing the blindingly obvious? The answer is our two foes, myth and prejudice. Let me start with the myths. Myth one: we tried it before in the 1960s and it did not work then, so it follows that it will not work now. That, I suspect, is the platform that the Minister is going to try to use to dissuade us today. He will go through the process that failed and tell us that there are no arguments to counter them. Frankly, that is nonsense.
	In the 1960s, children's exercise during the school day was at least twice the level that it is today. Children walked to and from school, or at worst from the bus. They had at least three hours of PE in both primary and secondary schools. I well remember my own children in the local comprehensive school having a lunch break of one and a half hours to allow them time for hockey practice, netball practice, gym club, badminton—the list was endless. Then after school there were midweek matches and, yes—wait for it—Saturday morning matches against other schools every weekend of the year. Compare and contrast, Minister, if you dare.
	The exercise diets of now and the 1960s could not possibly be more different, nor could the food diet. My mum cooked Brussels sprouts every Sunday, not for several minutes, but for several hours. She reduced them to a pulp, and in the process steamed up every window in our distinctly uncentrally heated council house. The aroma lingered on for days. I am sure she never enjoyed the nation's favourite food of today, chicken tikka masala, or had any concept of convenience food. So contrast that, too, Minister, and ponder on the other threat to our health of meals off the shelf, even if they come from Sainsbury's and assure us that we are being good to ourselves—hence the statistics for today's generation and hence the urgency for us to make a change.
	Myth two: the Scots will not let it happen. It is obviously darker further north, but the argument has always focused on Scottish farmers. Do farmers have such a controlling influence north of the Border or is the entire Scottish economy at risk if we ask Scottish crofters to suffer extra morning darkness while bringing in their Highland cattle or, indeed, in reality are Scottish farmers or non-farmers any different in their aspirations from those of us south of the Border? Obviously not.
	There are two key factors that I wish to put forward about the Scots. First, they produce highly talented sportsmen and women, from Eric Liddell to Liz McColgan and Andy Murray. Their talent is phenomenal. The Scots care about sport. Could they, would they, resist the proposal before us today if it meant more time for their children to develop their sporting talent? Even Scottish farmers have totally different lifestyles from that of their parents in the 1960s. The old arguments just will not hold.
	The Scots have another reason to welcome the Bill. Tragically, they have one of the worst health records in Europe. In parts of Glasgow, the male life expectancy is only 58 years—what a tragic waste. That is mostly due to poor diet and lack of exercise. People in Scotland are acutely aware of the problem and are striving to overcome it. Our Bill will help and support them not only to produce more sporting heroes, but also to live a better and longer life where the balance has been restored.
	Myth three: children will be killed in the dark on their way to school. That is not true. I leave that point to my excellent colleagues on the Benches beside me to dispel, as I know they will.
	Myth four: it will be damaging to the economy—airline and train schedules, as have already been mentioned, will have to be redrawn, and nobody wants it. That is just not true. Today, colleagues will talk about the advantages of moving to Central European Time and make the business case for coming into step with our major trading partners. From first-hand experience as an MEP, I know the frustration and difficulty of trying to work with constituents and others when we seem to be acting in a parallel universe.
	No, the arguments are fragile, but much more worrying is the underlying prejudice, the avoidance—as some may see it—of further harmonisation and integration with central Europe and our European partners with whom we can make a better future. Could it be possible that a political party would sacrifice the health and well-being of our citizens on such a negative premise?
	Myth five: what about our milkmen and postmen? My milkman, who still delivers to my door, is up at 3 am every morning. He tells me that the dark, empty streets are his best ally in allowing him to do his round quickly. As for my postman, he parks his car at the end of the road and I am happy to have my letters through my door by 9.30. How things have changed, yet again, from the 1960s. Postmen and milkmen are also family people. Their children's needs are just the same as everyone else's. Are they really likely to allow their particular work style to dictate everyone else's? I think not.
	So, Minister, make my day, and not only mine but everyone else's in Britain. Stand up and say, "I am completely persuaded by the value of the Bill. I will urge the Government and all Cabinet Ministers to look at the proposal favourably, to demonstrate joined-up government and to say, 'We are the future, not the past'". Challenge every MP in every constituency to ask their constituents what they think. I know the answer; the answer is yes. Let us give this Bill our fullest support and ensure that it becomes reality at the earliest possible opportunity. I look forward to the Minister's reply.

Viscount Montgomery of Alamein: My Lords, it is a great pleasure to follow the noble Lord, Lord Laing, and the noble Baroness, Lady Billingham. Their speeches—one comprehensive and one brief—were to the point. I agree with both of them. So far, so good—three up and several more to play.
	In his reply to my Unstarred Question on Central European Time in January, the noble Lord, Lord Sainsbury, said that revisiting this issue was like flogging a dead horse. This horse is not dead; it is very much alive and well and in a very good state of training, as has been demonstrated so far. The Bill introduced so comprehensively by my noble friend Lord Tanlaw is more than adequate proof of this and has my wholehearted support. There is no need for me to rehearse too many arguments on this matter, because I made them in January and during a whole number of speeches in the 1990s.
	However, what is proposed today is a new and quite excellent idea—to have an experimental period. The fact is that circumstances since 1968, as have already been pointed out, have changed radically; lifestyles are different, we are all doing different things and we are much more involved with trade overseas, particularly in Europe, where we do 60 per cent of our trade, as the noble Lord, Lord Sainsbury, knows very well. So we have quite a different situation: we have moved on. There is no doubt that this Bill has considerable support. What is being suggested is the right way to go forward, and I hope the Government will take it seriously.
	I have a feeling that this debate will go on longer than originally anticipated, so, before I sit down, I should give an explanation, because I may not be able to stay until the very end. We are currently enjoying a visit from the President of the Dominican Republic. This is an official visit—indeed, we were the first country to recognise that country when it gained independence over 160 years ago—and the first visit by the president of that country. As noble Lords know, I am heavily involved with Latin America, of which this is a member country. Therefore, I must go to lunch with the president on his last day here. I mean no discourtesy to my noble friend Lord Tanlaw or, particularly, to the noble Lord, Lord Sainsbury, from whom I know we will continue to hear a good deal on this subject. I very much hope that this Bill will receive a brief passage through this House and be acclaimed wholeheartedly in the House of Commons. An experiment is an experiment. That is just what we need to do. We have moved on in 40 years, and it is time to try it again.

Lord Faulkner of Worcester: My Lords, following the noble Viscount's sporting analogy, I am very happy to bring the score up to 5-0 in support of the Bill of the noble Lord, Lord Tanlaw. I join others in congratulating him not only on introducing it today, but on his perseverance on the issue over so many years. It is evident that he has a great deal of support in this House and, I think, in the other place. I hope that when my noble friend replies for the Government, he will take note of the degree of support that the measure has.
	The noble Lord's timing is absolutely impeccable in getting the Second Reading today with the clocks going forward this weekend. No Member so far in this debate has drawn attention to the fact that this is a very auspicious day for those who are interested in clocks and time-keeping. This morning, His Royal Highness the Duke of Edinburgh is unveiling a memorial in Westminster Abbey to John Harrison, who spent half his creative life inventing the perfect timepiece, accurate to one second a month; he then spent the next 10 years of his life persuading the Board of Longitude to pay him the prize money they promised they would pay him when he invented it. I hope the noble Lord Tanlaw will not have to wait 10 years to get his reward.
	It is well known in this House that I have a deep affection for and interest in the railways in this country, which I regard entirely as a force for good. I would like to put it on record that it was the railway system in the Victorian age which brought about standard time in the United Kingdom. The Great Western Railway was the first to realise that it could not run a timetable if the time in Bristol was different from the time in London. It adopted a common timetable in November 1840. Other railways followed suit and, by 1847, virtually all were using London time. Indeed, by 1855, the vast majority of public clocks were set to GMT, though some, like the great clock on Tom Tower, which may be familiar to your Lordships who know about Christ Church in Oxford, was fitted with two minute hands, one showing GMT and the other the local time. It may not surprise noble Lords to know that the lawyers were the last group to hold out on standard time. They stubbornly stuck to local time through to 1880. Indeed, you had the extraordinary position where polls in some parts of the country were opening at eight o'clock and closing at four o'clock, while in other parts they were opening at 8.13 and closing at 4.13.
	Let us get back to the Bill. It is widely known that this issue divides government departments. If it were being debated purely as a road safety measure and was the responsibility of the Department for Transport, it would get a very fair wind. But the Department of Trade and Industry is in charge of time and we know from quite long experience now that it is—shall we say?—a little less enthusiastic about the change to double summer time. Nevertheless, I hope that my noble friend Lord Sainsbury of Turville can offer some comfort to the noble Lord, Lord Tanlaw, and tell the House that the Government are prepared, at least, to offer a fresh review of the issue.
	The most recent report on the effects of adopting summer time in winter was published by the Transport Research Laboratory back in October 1998, eight years ago. It concluded that if the UK adopted single/double summer time—that is, GMT plus one hour in the winter and GMT plus two hours in the summer—400 fewer people would be killed or seriously injured on our roads. The figures published recently by RoSPA—I declare an interest as a former president of that organisation—and by the Parliamentary Advisory Council for Transport Safety show that the number of casualties would fall by around 450; that includes between 104 and 138 fewer deaths on the road. The reduction in road accidents affecting schoolchildren is likely to be particularly marked, as over four-fifths of accidents occur after school, when children and, indeed, drivers are likely to be more tired and less alert than they are in the morning. So, an extra hour's daylight at the end of the day after the schools come out is likely to be very beneficial from the road safety point of view.
	I do not know whether the Government accept those figures. I am pretty sure that the Department for Transport does. But whether or not they do, surely it is time that we had another experiment of the sort proposed in the Bill, accompanied by new authoritative research showing what the effect on road casualties would be from the change.
	What the noble Lord, Lord Tanlaw, is proposing is extremely moderate. He is not suggesting that we change irrevocably to double summer time, with no opportunity to switch back; he is proposing a three-year experiment. Neither is he suggesting that Scotland and Northern Ireland, or Wales for that matter, will be dragged, kicking and screaming into adopting these proposals for lighter evenings. Instead, his Bill gives the devolved administrations in those parts of the United Kingdom an opportunity to opt out, if they wish. This is a novel approach to the issue, and I congratulate the noble Lord, Lord Tanlaw, on thinking of it.
	I hope that the whole of the United Kingdom will agree that the proposal makes sense, because I do not think, any more than does the noble Lord, Lord Laing, or other speakers, that the arguments about early morning workers in Scotland, in particular—farmers, those delivering milk, postal workers and so on—are anything like as strong as they may have been in the past, or that the reality is as strong as the prejudiced seem to think that it might be. But, in any event, the Bill of the noble Lord, Lord Tanlaw, gives Scotland the right to choose. That seems to me to be a very sensible compromise.
	Certainly, when we look at this issue from a business and commercial viewpoint, it is self-evident that we in England do business with many more people in continental Europe than in Scotland. There is strong support for this change for people involved in sport, leisure and tourism, as my noble friend Lady Billingham pointed out. But, for me, the most compelling argument is road safety. We have a good road safety record in this country—a lot better than many others in the world—but we could do better. I am convinced that changing to lighter evenings would make a real difference, particularly in respect of road casualties.

Lord Addington: My Lords, of course the noble Lord is right; I said that this was a question of management and convenience. People in the United Kingdom cross the border more casually and for a shorter time compared with people who face checks when they cross the Channel, so there would be a slight change there.
	I argue that there is no great and wonderful answer. I actually think that we are arguing on the margin. There are minor benefits here and there, backwards and forwards. Lighter evenings become more intense at some times of the year and less intense at others. Coming out of a long, gloomy and, for us, surprisingly cold and dark winter, lighter evenings may seem more attractive than they might have done if we had a mild winter. I suggest simply that the benefits could be wonderful, but they would always be on the margin, and they would change depending on which part of the United Kingdom you are in.
	This debate has gone on long time. The road safety argument, followed by the leisure time argument, probably has the greatest force; but those arguments change as the amount of daylight up and down the country changes. If the Minister knows a way in which we can address this matter more coherently, I should be interested to hear it. However, we are talking about changing matters of behaviour and how we address those who lose out. Does the inconvenience of a change justify the benefits?
	On the day-to-day convenience of travelling across an internal border, I live in Berkshire and buy my milk in Wiltshire. For those two counties to have different time zones would be incredibly inconvenient for me at times. That would be the level of boundary for Scotland or Wales. It may be right that one can change one's watch and get used to the pattern, but it is an inconvenience. How much inconvenience are we prepared to put up with? That is the fundamental question.

Lord Sainsbury of Turville: My Lords, I am sure we are all grateful to the noble Lord, Lord Tanlaw, for his full and helpful explanation of the Lighter Evenings (Experiment) Bill. He made an extremely good case as far as one can for moving in this direction, but I have to say that my reply on this may be disappointing to him and to my noble friend Lady Billingham. I also make a fundamental point in response to the noble Lord, Lord Quinton: it is not the case that everyone agrees that there would be huge benefits and no costs. In fact, there is almost a complete split over the benefits and disbenefits.
	Noble Lords will be aware that the topic of introducing lighter evenings is a perennial issue and, indeed, was the subject of a debate in the House earlier this year. As those interested in the issue are also well aware, we have already undertaken an experiment of a similar kind. From 1968 to 1971 the British Standard Time experiment was carried out where continuous summer time, in other words GMT plus one hour, was adopted throughout the year in order to test public opinion. Objections were raised by the farming and construction industries, as well as others involved in outdoor work such as postal workers and milkmen, particularly those in the north of England and Scotland who experienced difficulties because of the late sunrise in winter. At the time they made their views very clear and there could be no mistaking their opinion. As a result of the experiment, following a vote in Parliament it was abandoned.
	It has been said that not many people start work early in the morning. I am afraid to say that lots of people do so, on construction sites and other places. It is not only the noble Lord, Lord Laing, who gets up to make his excellent biscuits; many others work or are making their way to work. Unlike the noble Lord, they do not like travelling in the dark. The noble Lord was a well-known workaholic, which meant that he produced wonderful biscuits for supermarkets, but I do not know that he is totally representative of the people of this country. I accept that that was a different world, but it is not clear to me that it was different in ways relevant to this particular issue. Yes, it was a horrible world in which people boiled Brussels sprouts to the point where absolutely no taste was left in them, but I fail to see how that is relevant to the question of summer time.
	Opinion on a move to Central European Time was canvassed more recently in a 1989 Green Paper published by the then government entitled Summer Time: A consultation document. The responses revealed again the huge divergence of opinion that existed on this issue. In fact, whenever the subject is raised, a wide range of views is expressed. What is also of interest and relevance here is the fact that another country has experimented with this more recently. The noble Lord, Lord Tanlaw, tried to explain away the situation in Portugal, but the point is that it did in fact move to Central European Time in 1992, but reverted to Greenwich Mean Time in 1996. It was concluded that the small energy savings could not justify the inconvenience the change created. It caused particular inconvenience through its impact on school children, which became a big issue in Portugal. The change had a very disturbing effect on children's sleeping habits as it would not get dark until 10 or 10.30 in the evening. It was difficult for children to go to bed early enough to have sufficient sleep. This had inevitable repercussions on standards of learning and school performance. Difficulties were also encountered with children leaving for school in complete darkness. Moreover, insurance companies in Portugal reported a rise in the number of accidents.
	The Government are well aware of the 1999 road study by the Transport Research Laboratory, and I agree with the noble Lord, Lord Addington, that it provides the most substantial and important evidence here. However, so far as one can make out, it was not borne out by the experience in Portugal. On electricity consumption savings, these were reported to be insignificant.
	I shall make one further general point about the Bill before I respond to the specific points. Certain provisions of the Bill amend Schedule 5 to the Scotland Act 1998. Its effect would be to alter the legislative competence of the Scottish Parliament. No doubt noble Lords will be aware that this would trigger the Sewel convention. The relevant provisions would therefore require the consent of the Scottish Parliament. Without that consent, the Government would be obliged to table amendments to the Bill to ensure that the convention is not breached. There is no likelihood of the Scottish Parliament agreeing to that change. It is also not realistic to talk about introducing a time difference between England and Scotland. If it is not a problem, what on earth is the argument for saying that there are huge benefits in aligning ourselves with Europe? Either there are benefits from aligning with other countries or there are not, but if there are, clearly a time difference between Scotland and England would have to be a disbenefit.
	I turn to one or two of the specific points made in the debate. In response to the noble Lord, Lord Tanlaw, I did not say that I know what people think; rather I merely reported that whenever this issues comes to Parliament, there is no surge of enthusiasm for it in the House of Commons, which suggests that members of the public are not going to their MPs and saying that they very much want the scheme. Further, one should always declare the response rate whenever one refers to polls. Polls of this kind can be deeply misleading because those who want to see change will respond, while people who do not particularly care or are against it may not respond. One must be careful with that kind of poll. One need only say at this point that the Bill will go to the House of Commons and representatives in the other place will no doubt reflect what they believe to be people's opinion.
	As regards trade with our EU partners, we simply do not find that there is any strong push from business to change the summer time arrangements, which would suggest that it is content with the current system. Indeed, trade investors have not raised it as an issue. Finally, such a change would have a negative impact on trade with the Republic of Ireland and Portugal as they are on Greenwich Mean Time. On energy savings, the Building Research Establishment has produced figures which indicate that a change would not lead to a reduction in energy use. Again, I did not say that all people would leave all lights on all day, merely that more people would do so, which would counteract the effect of any other energy savings. I have not seen the California study, but if it is important I shall reflect on it.
	On a reduction in crime rates, again different groups have different views on this issue. Assaults on and thefts from postal workers increase markedly from summer to winter due to the dark mornings, a situation that could only be worsened by imposing extra hours of darkness in the morning. There are just so many hours of darkness and if criminals want to commit a crime during those hours, they will simply choose the darker hours in which to do it. I do not think that they would be put off by the hours being different.
	The other main argument has always been the question of health benefits, tourism and sport, and how the change would bring a boost to people's morale and the health of the country by reducing cases of seasonal affective disorder. It is possible that we would all benefit mentally and physically from a change to lighter evenings. The mood of the nation could be improved, but equally other people think that the darker mornings are very depressing. Again, this is a question of balance. Some people would like it and some would not. Further, if it really could be shown that moving to double summer time would have an effect on obesity in children, I must say that I would be enormously enthusiastic about it. But there are rather deeper issues which lead to obesity in children than simply the amount of daylight in the evenings.
	In response to the noble Lord, Lord Monson, of course it is not easy to change when summer time starts and ends. It is covered very sensibly, I think, by the European Union in the 9th EC directive so that there is co-ordination across countries over when they begin and end summer time. I say to the noble Baroness, Lady Trumpington, that I do not think any part of industry would greatly suffer from this move. It is an issue for people who have to work early in the morning, and that could have an effect on the construction industry.

Lord Tanlaw: My Lords, I thank all those who taken part in this very interesting—almost one-sided—debate and I thank profusely all those who have spoken in support of the Bill. I shall not mention them by name but their names will be mentioned and thought about because they have put forward their own expertise to support the case for an experiment.
	Perhaps I may take up the point made by the noble Lord, Lord Addington—which sounds very valid on the surface—that the Scots and Northern Irish might decide to keep a different time. My point is that they should have the choice. If the people of Northern Ireland and Scotland want to have a separate time, yes, I agree there may be problems— but the case should be properly put to them. The local governance and the devolved governance should ask the people of Scotland more succinctly than they have because every organisation that I consulted in preparation for this debate had never been approached or asked the question before. I hope that, if nothing else, the debate will arouse some greater interest.
	I am, first, encouraged by the nice words that the noble Baroness, Lady Miller, said in relation to the preparation of the Bill, but I am also depressed because I thought that there had been a change of view and that the old Toryism had changed into something that looked to the future and was innovative and different. I regret to say that nothing has changed at all. So I do not think there is much to look forward to there. The Minister cracked on and once more put forward statistics from the last century as the reasons for this.
	But, nevertheless, the people will see that both the Government and the main opposition parties are not moving on this because it is politically difficult for them to do so. However, I hope that others may be more efficient than myself and put forward a case in the future that this should be looked at. I would like the Bill to be passed and the other place to be able to make a decision on it.
	On Question, Bill read a second time and committed to a Committee of the Whole House.

Lord Redesdale: My Lords, I beg to move that this Bill be now read a second time. I must apologise to those people wandering into the Chamber that the Title of the Bill gives absolutely no indication of what it is about.
	The purpose of this Private Member's Bill is to enable a certification mechanism and market incentive for intelligent electrical appliances that are able to sense power shortages on the electricity grid and alter their consumption accordingly.
	Dynamic demand appliances contain a low-cost electronic microcontroller. This listens to the mains hum, which runs at a frequency of around 50 hertz. The signal can be detected through every plug socket connected to the national electricity supply. Through this signal, the dynamic demand appliances can sense whether the National Grid is under stress and adjust the time at which they use electricity. The technology is suitable for appliances that already switch on and off during the day on a "duty cycle", such as domestic and industrial fridges, freezers and water heaters.
	Millions of such appliances acting together would smooth out demand for electricity. This could allow for greater integration of variable sources of renewable energy, such as wind and solar. Such considerations are critical to long-term planning for the national electricity system if we are to achieve the high penetration of renewable energy necessary to meet and exceed Kyoto Protocol targets.
	Use of dynamic demand appliances would also cut carbon emissions by reducing the need for back-up generation on the electricity system. Currently, some power generators run at less than their full output so that they can continuously respond to changes in our electricity demand. Such generation is generally less efficient because it has to run partly loaded and at variable rate, resulting in additional fuel use and carbon emissions. Academics are currently working to calculate the likely carbon savings associated with dynamic demand. Best estimates so far indicate that this may be in the order of 2 million tonnes of carbon dioxide per year. To put this in context, 2 million tonnes of carbon dioxide is equivalent to approximately one-quarter of the amount that would be saved if the Government met their 10 per cent renewable energy target.
	The company which operates the National Grid current spends around £80 million per year to commission the type of back-up service that dynamic demand could supply. Dynamic demand could therefore significantly reduce the costs of running the national electricity grid.
	Early computer simulations also indicate that dynamic demand could provide significant system stability on the electricity grid by being highly responsive to sudden loss of generation, such as the failure of a major power plant or the tripping-out of a nuclear power station. In times of system crisis, dynamic demand appliances sense the system conditions and automatically defer their electricity consumption.
	This is one of those simple yet powerful technologies with a huge potential to help curb climate change. As customers, we would notice no difference in the performance of our domestic appliances, yet our refrigerators and water heaters would be providing a continuous stabilising service to the electricity grid, reducing our dependence on inefficient back-up generation and preparing the system for variable renewable energy sources. This is an important point because it negates any need to educate the consumer in the use of appliances.
	A laboratory test of a dynamic demand refrigerator and freezer is currently underway by the independent appliance testing company Intertek. This test has been sponsored by the Market Transformation Programme of Defra to assess the effect of dynamic demand operation on the performance of the appliances and to ensure that food safety is maintained. I look forward to development of the testing programme into a field trial, to verify the findings of computer simulations of the aggregated effect of many dynamic demand appliances operating together.
	By supporting dynamic demand technologies through this Private Member's Bill, we will help to create the conditions conducive for this technology to become a market reality. We will also greatly enhance opportunities to develop UK expertise in demand-side energy management. This has a significant part to play in reducing greenhouse gas emissions and is an area of technology development that has global significance, especially in rapidly developing economies such as India and China.
	It is worth noting that a House of Commons Private Member's Bill containing a clause that deals with dynamic demand passed its Report stage on Friday, 17 March. That Bill—the Climate Change and Sustainable Energy Bill—would require government to identify and address barriers to the introduction of dynamic demand on the electricity grid.
	On Monday, 20 March, I hosted a meeting in the Attlee Room—I commend the Catering Department for a fine lunch—bringing together representatives of Ofgem, National Grid, DTI, Defra, the Market Transformation Programme, the Energy Savings Trust, appliance manufacturers, electronic component manufacturers, energy suppliers and academics. We discussed routes to market for dynamic demand. Participants identified the need for a reward system to incentivise the redesign of electrical appliances to provide valuable demand-smoothing services to the National Grid, with the significant public and environmental benefits that I have already outlined.
	Several companies have made forays into exploring the technology and its potential benefits, yet none can justify the investment needed to realise the benefits of dynamic demand technology at a national level, unless a financial incentive system is in place. Conversely, while the grid operator would benefit from the services, it would do so only once sufficient dynamic demand appliances are in operation. Provision of an incentive scheme, without public policy intervention, is therefore highly unlikely. It is that need that this Private Member's Bill seeks to address.
	Before I discuss the clauses in detail, I have three questions for the Minister to see how the DTI could help in developing dynamic demand. Could a field trial, involving appliances in people's homes, be undertaken? That would help us assess the exact effect on the power grid that an aggregation of appliances would have. Secondly, could the DTI fund computer modelling of the power system to assess the precise benefits in terms of carbon dioxide emissions? Thirdly, could it fund modelling to assess the benefits of many dynamic demand appliances in helping to smooth the variable power from renewable energy resources? So far, this work has been undertaken by volunteer organisations whose funding is coming to an end.
	I turn to the Bill. The first clause seeks the establishment of a standard for dynamic demand appliances and a certification process for this standard. The clause also makes provision for the establishment of an incentive mechanism to reward appliance manufacturers for making dynamic demand appliances and introducing them on to the UK electricity grid. The second clause defines the term "dynamic demand appliance". I shall now explain each of the clauses in greater detail.
	Proposed new paragraph (a) in Clause 1 requires the establishment of a dynamic demand appliances standard for electrical appliances. A standard is necessary to ensure that all dynamic demand appliance controllers behave in a way suited to the needs of the National Grid, achieve the desired demand-smoothing effect, support carbon efficiency and maintain proper operational standards such as food safety. A published standard will also help to encourage manufacturers, competition and innovation to meet the criteria.
	Proposed new paragraph (b) requires the establishment of a certification process. This would allow for independent testing and verification of manufacturers' claims against the agreed standard. The certification process should ensure that dynamic demand appliances fulfil system requirements, deliver on-system and environmental benefits, and provide full accountability for the financial incentive mechanism.
	Finally, proposed new paragraph (c) requires the establishment of a dynamic demand incentive mechanism, whereby manufacturers may benefit financially for each dynamic demand electrical appliance certified and connected to the UK electricity grid.
	At the event I hosted on 20 March, an electronic component manufacturer indicated that the likely additional cost of introducing a dynamic demand controller would be in the region of £3 to £4 per appliance. A fridge manufacturer said that while this seems to be a small amount per unit, the profit margin on electrical appliances is small, so dynamic demand technology would be highly unlikely to be introduced without a financial incentive or legal requirement to do so.
	Due to its significant potential for allowing greater integration of renewable energy on to the electricity grid, and reducing carbon emissions associated with electricity generation, dynamic demand technologies may qualify for incentives funded by the energy efficiency commitment. An incentive mechanism enabled by energy efficiency commitment funds is a very promising method to incentivise dynamic demand technology. However, this would also require further research to be undertaken. For example, it would be important to verify the carbon savings attributed to individual dynamic demand appliances to enable a proportionate financial reward. I recommend to the DTI that this study be commissioned as soon as possible. It is important to send a signal to appliance and component manufacturers that it is worth investing in the development of this innovative technology. I also hope that the Minister can confirm that the new clause in the Climate Change and Sustainable Energy Bill currently in the Commons, which refers to the energy efficiency commitment, will cover dynamic demand.
	Clause 2 simply defines the term "dynamic demand appliance" as meaning those electrical appliances that have the ability to adjust their electricity consumption or output according to instantaneous power imbalances on the National Grid. This definition is necessary to distinguish dynamic demand technologies from the many other demand-side energy management techniques that already exist but which do not involve individual appliances monitoring and responding to signs of system stress indicated by mains frequency. The definition is also sufficiently broad to allow for competitive innovation among manufacturers.
	The measures in the Bill are simple, practical ways of addressing barriers to the introduction of an innovative and useful technology that could help combat climate change. The figure of 2 million tonnes of carbon dioxide is a worthy target in anybody's book. I commend the Bill to the House.
	Moved, That the Bill be now read a second time.—(Lord Redesdale).

Lord Addington: My Lords, my noble friend has done a very good job of introducing this Bill. It is the sort of measure we should be looking at more closely across the spectrum of ideas. It is a way that we can practically address our power grid and how we reduce CO2 emissions, without ripping everything up and starting again.
	We are always being told that we have to change the way in which we behave, such as switching off appliances. With the best will in the world, if you happen to be a vaguely forgetful person, such as myself, you forget to switch something off as opposed to leaving it on standby. When the Division Bell goes, how many of us leave our computer on standby and do not get back to it? This technology removes that level of human error or thoughtlessness. If it is successful, it will help us cut down energy use. It is exactly the sort of approach we must take to improve energy savings and reduce carbon dioxide emissions. It will require the prodding and pushing that is required by government or somebody in authority to make sure that these things happen by attaching some responsibility—sticks and carrots—to those who produce these items.
	The Government will undoubtedly have a scheme of two with a similar approach. But these proposals have been brought forward—now—and the Government can give us an idea about their thinking. If my noble friend has a list of other such schemes up his sleeve, I invite him to tell us about them. This is one area where we should be working together and engaging with one another to make sure we all know what everybody in the field is thinking. I commend the Bill to the House and look forward to hearing what the Minister and my noble friend have to say.

Baroness Miller of Hendon: My Lords, in introducing the Bill so ably, the noble Lord, Lord Redesdale, has explained that it is to assist with the saving of fuel, to make the best possible use of finite resources and last, but by no means least, to assist in the reduction of CO2 emissions. And who could possibly argue with any of that? The question is, what are the practicalities?
	In this country, there are more than 24 million households. It is fair to assume that in this modern day and age, something like 20 million of them have refrigerators, but, for the sake of the debate, let us say just 18 million. They have a life of around 20 years. How long will it take before all the fridges will be changed to the new technology—or enough of them to make a difference—and why would anyone want air conditioning that worked late at night when it is cooler anyway or central heating that did not work when it was coldest and at the time of maximum demand?
	I digress for just a moment. Perhaps the most immediate and effective dynamic demand device would be if we could persuade people not to leave their TVs, video recorders and DVDs on permanent standby. I read last week that in an average household that can cost more than £30 a year. How much fuel does that waste and how much pollution does that cause?
	All that the manufacturers have to do in the interest of world ecology is to remove the standby facility. It is not too long in the past when a TV was either on or off, with nothing in between. A moment ago I used the word "persuasion". I did so because I believe that it is up to industry to produce fuel- and energy-saving devices and, having done so, to persuade the public of the advantages of buying and using them. I do not believe that there is a place for the provision by our Government—meaning, of course, the British taxpayer—giving, as this Bill calls for, financial incentives to the manufacturers of fridges, TVs and other electronic goods. That is especially true when—and this is the sad situation—so many of them are manufactured abroad including in the Far East. That is even assuming that "financial incentives" is not code for a "subsidy" which may very well be illegal under EU law.
	Of course the Government have a part to play in encouraging energy saving and the optimum use of energy in every reasonable way, sort and form. My own party will most certainly be looking into dynamic demand technology as part of its present ongoing energy review. But it is up to industry to develop the technology and to persuade the public that they want and need it. I would commend to industry a paraphrase of the aphorism attributed to Ralph Waldo Emerson. If they build a better and more fuel efficient device, the world will beat a path to their door.

Baroness Noakes: My Lords, I thank the Minister for introducing these orders and regulations. I initially agreed to debate the four instruments together on the understanding that they raised similar issues. When I got into the detail, I realised that this was not entirely true, but I have only myself to blame for that, so I, too, shall speak to all four together.
	I do not believe that the first three instruments—the two guardian's allowance orders and the child benefit regulations—are controversial. To the extent that they uprate existing benefits by the movement in RPI, they are routine business. I would, however, like to clarify the nature of the uprated figures. The notes for the guardian's allowance orders helpfully tell us that the rate of RPI increase is 2.7 per cent, but they do not say over what period that was measured. It is only 2.4 per cent at the latest reckoning, so will the Minister say over what period the 2.7 per cent is measured?
	The child benefit regulations do not mention the RPI rate at all, but I have calculated the increases actually applied as being 2.5 per cent for the guardian's allowance and 2.6 per cent for the two levels of child benefit. Will the Minister explain the rationale for these figures and will he explain the Treasury's policy towards rounding? I believe that it is the practice of the Department for Work and Pensions to round up. We perhaps should not be surprised to find the Treasury rounding down, but it would be helpful if the Minister can clarify policy in that regard.
	I have one further question on the child benefit regulations. Regulation 3 has certain transitional provisions. The Explanatory Notes explain that they are to deal with transitional protection, but do not explain in what way. What type of child benefit will be paid under these provisions? By definition, they are paid to persons not qualified under Regulation 2. How many entitlements will there be? How much will be paid, and for how long?
	I turn now to the tax credits regulations, and I will start with the easy bit. I tried to find out on what basis the Treasury had amended the tax credit scheme to take account of inflation. According to the Explanatory Notes, the Treasury is supposed to lay a report before Parliament each year setting out what would be required for the tax credit scheme to retain its value. The Explanatory Notes to the regulations did not give any further information—in fact, they left a square bracket for that particular information—but one of the Minister's very helpful officials sent me a copy of the Treasury's report. It shows that the Treasury, in maintaining the value of benefits and thresholds, has used rates of between 2.7 per cent and 3 per cent, which appears to be using something slightly higher on the whole than the RPI calculations. Alternatively, it is using the RPI figure of 2.7 per cent and doing a fair bit of generous rounding-up. I hope that the Minister will explain the Treasury's approach to calculating the maintenance of the value of the benefits and thresholds in line with inflation, in particular compared with the other instruments in this group.
	While the Treasury has calculated the amounts necessary to protect the value of the amounts or thresholds, the regulations do not give inflation protection on a comprehensive basis. For example, the family elements of the child tax credit are left unchanged, as are some of the thresholds. Will the Minister set out the rationale for the various changes that have been made to the amounts and thresholds in the Tax Credits Up-rating Regulations?
	I now come to the more important issue: the tax credit scheme itself. We know that the Government have completely mismanaged the implementation of tax credits, with the result that billions of pounds of tax credits have been overpaid and underpaid. We also know that the insensitive way in which Her Majesty's Revenue and Customs then acted in withdrawing credits and pursuing overpayments resulted in great hardship for many who were caught up in the mess, to the extent that some even became reliant on food parcels in order to survive. The Government have never issued a word of apology for that. The Government's tax credit system has also been undermined by massive fraud; somewhat belatedly, the Government closed down the online portal.
	We know that tax credits are the brainchild of the Chancellor, but when they started to go wrong he was nowhere to be seen, and it was the Paymaster General who had to appear at the Dispatch Box to try to spin her way out of the extent of failure of the scheme. Perhaps it surprises no one that the Chancellor has not yet owned up to the fact that the scheme needs a radical rethink. Instead, the Government have produced a series of sticking plasters designed to give the scheme some semblance of operability. The tax credits regulations before your Lordships' House today contains one of those sticking plasters—a very large one.
	As the Minister explained, the order increases the income disregard from £2,500 to £25,000, in effect putting the tax credit scheme for most practical purposes on to a prior-year income basis. We have tried hard to find out the cost of this massive change to the construction of the scheme, but the Government have hidden behind a complete fiction—namely, that the cost of this change cannot be separated from the other changes to tax credits announced in the Pre-Budget Report. We know that it is a fiction because officials from HMRC told the Public Accounts Committee in another place that they had the calculations. Since then, though, they have been prohibited from revealing them by the Treasury. Any accountant knows that it is perfectly possible to calculate the effect of one element of a number of changes. It just requires a little logic.
	The PBR changes to the tax credit scheme overall were said to cost £100 million in 2006–07, but to produce savings of £200 million in 2007–08. In the past, the Government have said that the £2,500 disregard cost £800 million. If income volatility is indeed a feature of the income groups affected by tax credits, we might conservatively guess that the new disregard of £25,000 might cost three or four times that—around £2.5 billion, say. That means that the Chancellor's other measures in the PBR—namely, the timing and the increasing checks—are expected to produce reductions in tax credits of roughly that amount. That is why this issue is important. We need to know who is affected by the changes. Will it be the poorest, who need the tax credits most, or will it be middle England, who, with the £25,000 disregard, can now be within the means-tested benefit net at income levels of over £90,000? We do not believe that there can be a sensible debate about the elements of the changes to the tax credits that were made in the PBR until the Government are honest about the cost and incidence of the individual elements of the package.
	My main question to the Minister today is: will he come clean on the cost of the increased income disregard set out in these regulations, and indeed of the other elements of the changes to the tax credit package set out in the PBR? Will he also say whether the Government yet have any strategy to get themselves out of the tax credit mess?

Baroness Hollis of Heigham: My Lords, like other noble Lords, I welcome the uprating statement, in particular the Budget announcements on tax credits. We know that if we are to continue our successful story in trying to beat child poverty, by definition benefits, particularly child tax credits, have to rise faster than earnings in order to go above the median 60 per cent figure. That is a tall order and the commitment of the Government to that and the willingness of the Chancellor of the Exchequer to fund it are impressive.
	The big problem about tax credits has been that in the 200,000 or so movements a year that we get in tax credits, the really big move beyond the £2,500 figure was of the second parent in a relationship going back to work. I suspect, but I have no evidence for it, that the figure of £25,000 may have been aligned with median earnings, roughly speaking, to cope with the effect of the first year.
	The noble Lord, Lord Oakeshott, is absolutely right about child benefit and second and third children. We are increasingly seeing that poverty is focused in larger families, often workless families, rather than in smaller families. Therefore, I hope that my noble friend will take back the noble Lord's argument that we should be strengthening payments going to second and third children to mitigate the poverty in larger families. Half of poor children now live in larger families. Some help on the structure of child benefit or in tax credits would be welcome.
	I wish to comment on a small benefit that we seldom debate: guardian's allowance. I welcome the uprating. It used to be stewarded by the Department for Work and Pensions but a few years back it rightly went to the Treasury. Guardian's allowance is a modest additional allowance that is paid to a guardian—usually a grandparent, sometimes an elder sibling—to care for a qualifying child who has no parents. A parent cannot receive this allowance. The carer has the child benefit book. It was originally designed for orphans; for example, a child orphaned because his parents were killed in a car crash. Over the years, the allowance has been tweaked a little to extend it to "moral orphans"; that is children whose parents have disappeared off the landscape, usually because one parent is dead and the other is in prison or in a long-stay mental health hospital. As a result, we have been able to get a little additional money—£11 or £12 a week—in addition to tax credits and child benefit to elderly grandparents, often pensioners, who late in life take on guardianship responsibility for a child who has no parent to care for him and who would otherwise go into the official care system where fostering costs are £300 per week or more.
	How many children does it affect? My figures are out of date, so my noble friend can correct me if I am wrong, but they show that this allowance helps some 3,000 children a year at a cost of about £2 million per year. It is a tiny benefit. Today, I ask my noble friend to see whether he can extend a little more widely the concept of a moral orphan—a child whose carers or guardians receive guardian's allowance—in order to provide a more generous description. I was triggered to ask him this by a letter I received a couple of days ago. I have changed the names to anonymise the people. Mr and Mrs James are in their 60s and are shortly to retire. They have a teenage grandson, Pete. Their daughter died in hospital five years ago and, following that, her partner turned to drink and drugs. He is now addicted and has lost his home. Pete went to his grandparents to be looked after rather than go into the formal care system. The grandparents receive tax credits of about £10 per week and child benefit. All together, they receive an income of about £28 per week for Pete, which by no means covers the cost of a teenager. They applied for guardian's allowance and, technically quite correctly, the decision-maker refused it because when their daughter died they knew the whereabouts of the child's father. It was a matter of timing. Had the partner disappeared at the time of their daughter's death, they could have applied for and received got guardian's allowance. Had they applied for and received guardian's allowance and the partner subsequently reappeared, the guardian's allowance would not have been removed from them. They would have kept it.
	As it is, they have had no contact, so far as I know, with the child's father—he has been off the landscape for three or four years. Yet, under the small print of the formula, although they are grandparents approaching pension age, already very hard-pressed looking after their grandson, who they love to bits, to avoid his being taken into care, they are financially penalised because of the way that we have drawn up the description of the guardian's allowance.
	It is small beer money, £2 million a year among some 3,000 children, but it has been key to keeping many children out of the formal care system with the financial cost that brings and the huge emotional damage that it can do. We know what happens when children go into the formal care system; they seldom do as well as they would if they remained with a member of their extended family. I am not criticising the decision in the case I cited; it was technically correct. However, I ask my noble friend to take this matter away to see whether we can use guardian's allowance more widely. Before this allowance went over the Treasury, the Department for Work and Pensions was exploring whether it could be used in a more generous and sensible way to help members of an extended family care for a child when there was genuinely no parent in play. That is often because one parent has died, but may be because the parent is in prison or a long-stay hospital or because, as a result of mental health problems, substance abuse and the like, the child can no longer be cared for by the parent and the parent cannot reasonably be expected to provide financial support. The whole burden of responsibility falls on the grandparents.
	I leave it to my noble friend to explore whether this requires primary legislation or whether it can be done through looking at tax credits, but I ask him to take this issue away and follow up the work that should have been done several years ago. We started to make the concept more generous, but we did not get far enough before the stewardship passed. I ask my noble friend to take up the baton today to see whether we can help to keep more children out of the care system by rethinking the role of the guardian's allowance.

Lord McKenzie of Luton: My Lords, I thank those who contributed to the debate on these orders and regulations. It has been an interesting review. I will seek to deal with each of the points raised.
	The noble Lord, Lord Biffen, asked whether consultants have been involved in the construction and operation of the tax credit arrangements. There was originally IT system support from EDS; the issues surrounding that contract have been aired in the public domain, and a settlement reached. Capgemini is the current IT contractor. I am not sure, and do not have data on, whether consultants were used more extensively in the system. I will come back to the central point of why the system, as structured, will inevitably have overpayments and underpayments; it is inherent.
	I acknowledge the longstanding work of my noble friend Lady Hollis in this area, and her knowledge of the subject. She will be aware that guardian's allowance was never intended to provide support for children generally. The provision of financial support for children is and remains the responsibility of parents. Where parents abandon children to the care of others, it is for local authorities to consider what additional help might be forthcoming. However, I acknowledge her important point and undertake to draw it to the attention of my right honourable friend the Paymaster General, who I am sure will get back to her on this key matter.
	The noble Baroness, Lady Noakes, asked about the basis of the uprating. I hope I can satisfy her on her queries. The rise in the child element of the child tax credit is linked to earnings: 4.2 per cent. I think that is the average of the three months to July of last year. The RPI basis is the rate applicable on 1 September of last year: 2.7 per cent. The noble Baroness asked more generally whether it is policy to round up or down. I do not have anything specific on that, but I believe that it is rounded to the nearest 5p, whether that is up or down. If the position is different, I will ensure that she is informed of the principle.
	The noble Lord, Lord Oakeshott, raised issues about child benefit generally, whether it was falling behind, and what has happened in relation to the second child. Child benefit is an important component of support for families with children. As I said in presenting these orders, it has increased 25 per cent in real terms for the first child since 1997. For the second and subsequent children, it has been uprated by reference to the RPI. That is in stark contrast to what happened before this Government came into office. There was a three-year freeze in child benefit between 1988 and 1990, so this Government have a good record on that.
	The noble Baroness, Lady Noakes, asked about transitional provisions in the regulations. The transitional regulations continue to provide entitlement for certain lone parents who have been continuously entitled to child benefit lone parent rate since it was abolished in 1998. The transitional regulations will enable these people to receive child benefit lone parent rate if they cease to be entitled to specified benefits which currently prevent payment of child benefit lone parent rate, or they come off income support or jobseeker's allowance to start work. The child benefit lone parent rate is payable only for the first child, and has been frozen at £17.55 for the past few years. It will be extinguished when the normal enhanced rate increases above £17.55. Perhaps the noble Baroness will look at the record on that and, if she requires anything further, come back; I am sure we can satisfy her on that point.
	The cost of the pre-Budget report package of measures was raised, as it has been elsewhere. I stress that there is a package of measures here with components that are a cost to the Exchequer, including the £25,000 disregard. There are also components which are a yield to the Treasury: the shortening of the renewal window; the mandatory reporting; the collection of original income estimates; the reduction in time allowed to report changes reducing entitlement; and the withholding of accrued underpayments. These have been costed as a package, because they interrelate. If you stripped away individual bits of it, the outcome would depend on the order in which you took them. I reiterate the point made by Treasury officials before the public accounts hearing: it has been costed as a package and that is the information which has been provided. I do not think I can reasonably add to that.
	There was some speculation about the increase in the cost of the disregard being two to two and a half times the £800 million for the £2,500 disregard. We do not accept that assumption, as many families experience relatively small income rises over a year, and the £2,500 disregard benefits many families. Obviously, comparatively fewer families will be affected by the disregard up to £25,000.
	A question was raised about why there was no uprating of some components, and why the Government are freezing the CTC family element. Obviously, there is a finite resource that can be applied to this uprating. The Government have to find the right balance, given limited resources, between supporting families with children across the whole income range, and appropriately targeting support on families with lower incomes who need it more. This is why we have concentrated on the particular increase in the component of the child tax credit, and not generally uprated those other components.
	On the alleged mess of the child tax credit system and the tax credit system generally, we should acknowledge that it has been of huge benefit in helping to lift children out of poverty: some 700,000 children since 1997. The working tax credit is about encouraging people into work, facilitating their transfer into it and making it pay. That has been hugely successful across the board: some 2 million more people in employment under this Government. When the system was designed, it was acknowledged that, because it is a responsive system—it is not based on fixed income of a prior period, responding to changes during the course of the year—you will inevitably end up with underpayments and overpayments at the end of the year, when a squaring-up has to be done. That is an intrinsic part of the design of the system. Yes, there were some particular challenges at the start of the system, such as a learning curve as to the number of families who would increase their income or go into employment, which were not anticipated. There were certainly also difficulties with the IT system. Each of those is being worked through and addressed. That is why the package that my noble friend introduced in May last year, looking at administrative changes and the changes in the pre-Budget report, has been so important in making sure that the system works more effectively and is reaching the people that it should.
	The benefit is reaching in the first year just under 80 per cent take-up, and 90 per cent or 91 per cent of the poorest families were availing themselves of those important measures. That is making a real difference; it is transforming their lives in a very positive way. The Government stand fully behind the tax credit system. The noble Baroness said that she is looking to see it reformed; we would be interested to see in what way she considers it might be reformed. We have not heard any detail of that.
	We need to make sure that we deal with issues of fraud. Particular issues arose in November last year associated with identification theft from Network Rail and from DWP. That was spotted very early on in the system, and HMRC acted to stop that. It stopped making payments, and a range of investigations are under way to deal with that. Again, this is a significant system—the annual cost of the tax credit system is £12 billion to £13 billion. It was inevitable that there would be some targeting of fraud on the system, which is why protections were put in place. We need to be ever vigilant on these matters.
	I refuse to accept the assertion that things are in chaos. This is helping lots of families in a very real way, particularly families with children. I am not sure whether I have answered each of the questions that have been raised. If I have not, I am happy to have another go.

Lord Bassam of Brighton: My Lords, organised crime is one of the biggest challenges faced by law enforcement in this country or, more precisely, by everyone in the country, because everyone pays the cost. Some pay directly, with their health and livelihoods harmed, and others pay indirectly, through increased costs for goods and services to cover the costs of fraud, or through their tax bills.
	As noble Lords will know, in the White Paper One Step Ahead, the Government made a commitment to create a new agency, the Serious Organised Crime Agency, to counter these threats. The new agency brings together staff from the former Customs and Excise, the National Crime Squad, the National Criminal Intelligence Service, and the UK Immigration Service. The Serious Organised Crime and Police Act 2005 established SOCA, which will assume its functions on 1 April.
	That Act specifies in Section 43 that the director-general may designate SOCA staff with powers, so long as they are capable, adequately trained and suitable to apply them. He may designate staff as people having one or more of the powers of a constable, the customs power of an officer of Revenue and Customs, and the powers of an immigration officer. Initially, SOCA will designate officers only with the powers that they have been operating in their precursor agency. So a SOCA officer who was a police officer with the National Crime Squad will be designated only with the powers of a constable. Over time, as people are trained in other powers, they will be designated with other powers.
	When using their designated powers, SOCA staff members rely on other pieces of legislation, such as the Police and Criminal Evidence Act. In many cases, those other pieces of legislation are framed in a way that means that they can be used by a SOCA staff member with the necessary designation, but, in some cases, there are features of those other pieces of legislation that need technical amendment before they can be applied by a SOCA officer, as set out in the Serious Organised Crime and Police Act. Section 52 of the Act provides that such amendments may be made through secondary legislation.
	The statutory instrument being considered today does exactly that; it uses the power in Section 52 to amend a small number of enactments so that the powers that they confer can be operated by SOCA officers. The Acts that it amends are the Immigration Act 1971, the Police and Criminal Evidence Act 1984, the Immigration and Asylum Act 1999 and the Anti-social Behaviour Act 2003. No amendments are needed to the Customs and Excise Management Act, because the powers that it provides can be operated by a designated SOCA officer without any amendment.
	In accordance with Section 52(6), the Secretary of State has consulted Scottish Ministers, who have indicated that they are content. I commend the draft order to the House.
	Moved, That the draft order laid before the House on 28 February be approved [20th Report from the Joint Committee].—(Lord Bassam of Brighton.)

Baroness Noakes: My Lords, I thank the Minister for introducing the regulations. We have no problems with them, since they extend the experiment of employment zones and we obviously support the development of schemes which have a realistic chance of achieving the return to employment of those whose chances are otherwise limited.
	Can the Minister assure the House that this extension of 12 months will be the last extension, and that before we reach this time next year, the Government will have completed their analysis of the employment zone scheme and presumably decided either to roll it out further or abandon it, as dictated by the evidence? We are firmly in favour of experiments, but not ones that go on for ever. If there is good news in the scheme, then others should reap the benefit. If it is not positively evaluated, there is no point in continuing.
	My main area for questioning concerns the link between the employment zone programme and the DWP's Gershon efficiency programme. As I understand it, Jobcentre Plus is due to deliver a reduction of 15,000 full-time equivalents in the period to 31 March 2008. It is already well publicised that this programme has run into problems. The report of the Select Committee on Work and Pensions in another place only last week sets that out.
	At the heart of the employment zone experiment is the use of contractors to deliver programmes. Presumably, when contractors are used, the need for those employed in Jobcentre Plus will go down, but the cost will not go down—it may even go up. How does the department score this in calculating its Gershon efficiency gains?
	The Minister will be aware that the National Audit Office's report on the Gershon savings published last month noted that the DWP needed more information on the numbers of agency staff and contractors employed, with the very clear message that they were being ignored in the calculation of Gershon efficiencies. That cannot be right. Will the Minister assure us that false efficiency gains are not being scored as far as the employment zone contractors are concerned?
	Will the Minister also comment on how the employment zones are funded? To put it another way, how do the contracts with the contractors actually work? It has been suggested to us that successful contractors have had their programmes curtailed if the Jobcentre Plus budget for them has run out—the very opposite of the desired result is achieved. How does the funding work? Will the Minister reassure the House that success is rewarded and not penalised.

Lord Hunt of Kings Heath: My Lords, I thank both the noble Baroness, Lady Noakes, and the noble Lord, Lord Oakeshott, for their general support for the pilots, which is very much appreciated. The noble Baroness, Lady Noakes, asked me whether I could guarantee that I would not come to the House in a year's time—or whoever is fortunate enough to be in this position—to propose new regulations to extend these pilots. I cannot guarantee that, because we are still in the evaluation process. At this stage, it is not possible to say what we intend to do in the future. The beauty of the procedure that we have is that it enables us clearly to develop pilots, learn from them and therefore consider whether we should carry on with slightly different pilots or extend them throughout the country. At this stage, I cannot say what is to be the likely outcome, although I accept that if the process has proven to be successful it is important that we learn the lessons generally.
	We will be publishing some evaluation in August 2006 followed by an end-year report. That will be made available and we will carefully consider the conclusions. It might help the House if I were to say that early indications are generally positive. The providers are working well with these difficult customer groups by using a flexible one-to-one tailored approach. We think that job entry rates are pretty good among the younger groups. Job entry rates are around 50 per cent for New Deal young people—returners after six months of the programme start. Although young people present a challenge in terms of getting them to sustain work, providers suggest that putting in place extra measures to promote sustainability seems to bring about positive outcomes. However, as I said, we will see when the full evaluation reports come out and that will then lead to a decision about whether we extend the scheme, go for more pilots or introduce these more generally throughout the country.
	The noble Baroness, Lady Noakes, asked me about Gershon and various questions around the efficiency of the Department for Work and Pensions. With regard to the Select Committee report on Jobcentre Plus, we shall of course consider the committee's recommendations and respond as we are charged to do so. We believe that the report primarily focuses on a period when we recognise that Jobcentre Plus experienced difficulties, as it implemented a major change programme. Things have improved considerably since then and Jobcentre Plus now routinely answers more than 95 per cent of calls to make benefit claims. We think that those standards compare to those of leading private sector organisations. Of course, we cannot be complacent and we shall continue to monitor and improve the service.
	On the noble Baroness's more general point, she is right to suggest that the department is going through a considerable change in its mode of operation and we have plans to reduce the number of staff employed directly by the department. I shall write to her on the specific technicality that she raised, as I am afraid that I do not know the answer to that. But on the general principle, she will notice that in the Budget settlement my department will undertake in the next spending round a 5 per cent real terms cut per year in our resources. So clearly the focus of the department is on a wholesale re-engineering to ensure that we improve our efficiencies to meet the new budgetary envelope that we shall operate in and to deliver a better service to the public.
	The implication of what the noble Baroness said was that some of the lessons learnt in the employment zones by using private contractors may well be valuable in the future re-engineering and restructuring of the department. She will also have noticed that in the Green Paper on welfare reform we referred to the intention to use private and voluntary sector organisations to help us to take forward our welfare reform programme.
	The noble Baroness also asked me about the way in which the private sector contractors were paid. I have lots of details here, which perhaps I can send her, but I make the general point that the private contractors are incentivised to be successful, so the more successful they are in getting people into work for a sustained period, the more money they get; the quicker they get people into work for a sustained period, the more profit they are likely to make. As I say, I shall happily write to her with further details.
	I was very surprised at her suggestion that the payments system works in a different way. If she has evidence of that I am happy to look into it, but my understanding is that the payments system is expressly designed to incentivise the private contractor to do well. Because of the random selection of people going into each of the companies, there is no opportunity for cherry-picking. That, again, is very valuable information for the future.
	The noble Lord, Lord Oakeshott, referred to the question of postcodes and electoral ward boundaries. My answer to his question why we use postal codes instead of electoral ward boundaries is, "Why not?" The official answer that I have been given is that in essence, whichever system you use, changes occur, so there is no perfect way in which to set the designated areas. I know that postcode changes take place; if they take place within the designated employment zones, either we can bring new regulations in to regularise that—because it could have the effect of taking a customer out of an employment zone—or the customer could continue on a voluntary basis, even if the postcode had been changed. Whichever mechanism we use, we have sufficient flexibility.
	I am tempted to refer the noble Lord to the regulations and to the Birmingham employment zone. He mentioned Washwood Heath; my own ward of Mosely and Kings Heath is here, but not my own postcode, so if a reshuffle takes me away I am afraid that it will not be open to me to take advantage. But I welcome further discussion with the noble Lord on these extremely important considerations in the life of Birmingham.

Lord Hunt of Kings Heath: My Lords, this statutory instrument sets the rate for the administration levy for the Pension Protection Fund for the financial year 2006–07. It also provides that there will be no levy for 2006–07 for the Pension Protection Fund ombudsman. The Government have a commitment to ensure that members of defined benefit occupational pension schemes can be confident that they will still get a protected level of income in retirement if their employer unfortunately becomes insolvent and the scheme is underfunded. The Pension Protection Fund, which opened its doors on 6 April 2005, forms a key part of meeting this commitment and, to date, more than 25,000 members of around 53 schemes are in an assessment period to establish whether they will enter the PPF.
	While it is right and necessary to protect those benefits, it is not right that taxpayers should foot the bill. As such, the PPF is financed through levies on schemes that are eligible for PPF assistance. The pension protection levy, together with the assets of schemes that are transferred in, provides for the compensation fund itself, but it is important that this money is ring-fenced for the payment of compensation. There must always be funds in place to meet the compensation awards made by the PPF. In light of that, the Pensions Act 2004 sets up a separate administration levy that is raised to meet the ongoing running costs and the initial set-up costs of the board of the PPF. The set-up costs of the PPF were originally financed by money provided for by Parliament, and these are being recovered over a three-year period.
	The PPF legislation also provides for a disputes process so that interested parties can ask for a review of a range of key decisions by the board where appropriate. These are described as "reviewable matters" and are set out in Schedule 9 to the Act. There is also a right of complaint about alleged maladministration by the board. There is a two-stage internal process within the PPF for people to have such cases reviewed and reconsidered. However, if people are still dissatisfied, they can refer the case to the independent and newly established PPF ombudsman. Information about referring a case to the ombudsman is on the PPF's website, and also has to be given by the PPF to people it notifies of a second stage reconsideration decision. To date, no matters have been raised for internal review, so no matters have been referred to the PPF ombudsman.
	The Secretary of State initially funds the PPF ombudsman's work from money provided by Parliament. A levy can be raised to recover this expenditure, but for the financial year 2006–07, as for the financial year 2005–06, no PPF ombudsman levy will be needed. With no cases yet referred, the cost of the ombudsman to date has been very small, and it is not practical to levy such small sums at this time.
	As to the regulations before the House themselves, Regulation 2(2) provides that the PPF ombudsman levy is not payable for the financial year ending on 31 March 2007. It amends Regulation 4(4) of the principal regulations, so that they now read:
	"The PPF Ombudsman levy is not payable in respect of the financial years ending with 31st March 2006 and 31st March 2007".
	I understand that so far no reviewable matters have been raised with the PPF for the internal review process. I also understand that there have so far been no complaints of maladministration against the PPF.
	The PPF administration levy is calculated using a rate per member of a scheme. This is a variable rate, based on the number of scheme members on a scheme's reference day. Regulation 2(3) brings the administration levy reference day into line with that for the pensions regulator's general levy, a year sooner than we had thought feasible. The change is technical, for simplicity.
	The main provision in this instrument is that in Regulation 2(4). It provides that the administration levy amounts payable in the financial year ending 31 March 2007 will be the same as in the financial year ending 31 March 2006.
	Regulations 2(5) to 2(7) make some very technical amendments relating to the pension protection levy. Regulation 2(5) amends the principal regulations to add the pension protection levy to the list of levies covered by the general provisions of those regulations. The addition of the pension protection levy at this "general" regulation is needed so that an exception can be then made in respect of multi-employer schemes in a later regulation, Regulation 2(7). Regulation 2(6) makes a consequential amendment to the principal regulations to take out reference to the pension protection levy there, which is no longer needed. Regulation 2(7) amends the principal regulations to provide that that regulation, which is about multi-employer schemes, does not apply to any pension protection levy. Regulation 2(8) amends the principal regulations to add a reference to the corresponding Northern Ireland provision to the pension protection levy.
	As the pension protection levy is new for 2006–07, it needs to be added to the current list of levies for which such provision is made. This list already includes both the PPF administration levy and the PPF ombudsman levy. These levies regulations clearly impact on business, as they provide the administrative resources that are needed by the PPF. This was considered in the Pensions Act 2004 regulatory impact assessment, which estimated the annual administrative cost of running the PPF to be around £15 million a year. That continues to apply.
	I confirm that I am satisfied that the statutory instrument before us is compatible with the rights in the European human rights convention. I commend it to the House. I beg to move.
	Moved, That the draft regulations laid before the House on 15 February be approved [19th Report from the Joint Committee].—(Lord Hunt of Kings Heath.)

Baroness Noakes: My Lords, I thank the Minister for introducing the regulations. He said that the cost will be approximately £15 million or, to put it another way, British business will have to stump up around £15 million in administration costs. This is not the element of the costs of the Pension Protection Fund that will cause the most concern, so I shall not delay the House. However, I wish to put on record that the total costs of the PPF are of concern to British business and there will be a point beyond which the costs of the PPF, whether administrative or otherwise, could start to inflict economic harm. At that point, it will not matter what label the costs have.

Lord Hunt of Kings Heath: My Lords, I am grateful to both noble Lords for their welcome—their support at least—for the regulations. "Welcome" is going too far. I understand the point raised by the noble Baroness, Lady Noakes. Although I was not privileged to take part in the debate on the primary legislation that led to the establishment of the PPF, it was clearly an issue that was fully discussed. What is the alternative? It is presumably that the Government contribute funding. The noble Baroness will know that we do not consider that taxpayers should support or finance the PPF. Many taxpayers are not members of DB schemes and would therefore never call on the PPF. I understand the pressures on businesses that have pension deficits. We are all aware of them. The way that the PPF is going and the decisions that have been made on the levy understand the pressures, but it is important that we do everything that we can to ensure that pensions funds in general are brought back to a satisfactory, viable position as soon as possible There is clearly a balance to be drawn.
	On the resignation of Myra Kinghorn, I will be happy to pass on the comments of the noble Lord, Lord Oakeshott, to her. I am happy to pay tribute to the work she has done and, indeed, to the chair and board of the PPF. Obviously, the appointment of a chief executive is not a matter for the Government, but for the PPF. My understanding is that the board will be making a statement about that in due course, but I am afraid that I do not have any more information at all. Knowing how the board and chair have conducted themselves, however, I would be surprised if the PPF was not able to make effective interim arrangements as quickly as possible.
	I am not sure the noble Lord, Lord Oakeshott, really wanted me to respond to his final point, so I will not.

Lord Hunt of Kings Heath: My Lords, the draft order sets out the proposed rates of contracted-out rebates that will apply from April 2007. Before I set out what those rates will be and say why we have decided on our particular approach, it may be helpful to the House if I explained what the rebates are and how the process to review them works.
	When someone contracts out of the state additional pension—the state second pension—the state has a reduced liability and pays less pension in the future. In return, the state pays a rebate. The rebate is delivered through a reduction in national insurance contributions and/or an end-of-year age-related payment to an individual's pension scheme. The Secretary of State has a statutory duty to review the contracting-out rebates at least every five years. This means that rates can be reviewed more often than that if appropriate. To assist the Secretary of State in his review, the Government Actuary is required to report to him on the level of rebate rates. The last full review of the level of rebates was in 2001, for rebates from April 2002.
	The present review began last year. The Government Actuary issued a consultation paper in September 2005 on the actuarial assumptions that he proposed to adopt for his report to the Secretary of State. The Government Actuary gave the responses to that consultation careful consideration before drawing up his final report. His advice to the Secretary of State has been taken into account in the proposals before the House.
	The proposals in the Government Actuary's report reflect his view of the factors affecting the cost of providing benefits of equivalent actuarial value to the state pension forgone as a result of contracting out. These include, for example, the continued low levels of real interest rates, expectations of continued improvement in pensioner longevity and the expenses of private pension provision. The Government Actuary's report and the report by the Secretary of State were laid before the House together with the draft order on 1 March.
	The Government Actuary's recommendations, if accepted, would result in a significant increase in the cost of rebates from April 2007. We have thought carefully about whether this would be the right thing to do. We are currently in the process of reaching a long-term settlement on pension reform and are considering the Pensions Commission recommendations—I will say more about that in a moment. While we are considering the future of pension policy, it is responsible—and we have decided—to take a cost-neutral approach. A significant increase in expenditure on rebate rates would not be appropriate at this time.
	We have had to weigh up the recommendations of the Government Actuary and the need to consider the future of pension policy. So, our proposals, to apply from 2007, are as follows. On salary-related occupational schemes, if an individual is contracted out of the state second pension, the employer and employee currently pay national insurance contributions that are reduced in total by 5.1 per cent of earnings between the lower and upper earnings limit. That will be increased to 5.3 per cent. All of the increase in the flat-rate rebate for salary-related occupational schemes is to go to employers, in recognition of the benefits provided by those schemes.
	For personal pensions and money purchase occupational schemes, we are accepting the Government Actuary's recommendations on increases in the age-related rebates. However, we have decided to reduce the cap from its present level of 10.5 per cent to 7.4 per cent. The cap was introduced in 1997 by the last government to restrain cost on public finances. Reducing the cap to 7.4 per cent will affect those aged 44 and over in personal pension schemes and those aged 48 and over in money purchase occupational schemes. In personal pension schemes, those aged above the level at which the cap bites are likely, other things being equal, to be better off not contracting out of the state scheme. However, in practice, that will of course depend on personal circumstances and expectations about the future. It will be up to individuals to weigh up whether to contract in or out, after taking into account information received from their scheme and, if appropriate, their adviser.
	To achieve a cost-neutral approach, we have had to strike a balance between different types of scheme, and I believe that we have achieved the right balance. The proposed package offers an increase in rebate rates for salary-related occupational schemes without setting too low a cap for money purchase schemes. I emphasise that it is a legal requirement that the rebate rates are reviewed at least every five years. Therefore, the timing of this review is fixed—it is five years since the last review set rates from 2002. The rebate rates can be reviewed again whenever we think it appropriate. A decision on timing will be taken once the way forward on pension reform is clear, but the policy on contracting is an important part of wider pension reform.
	As noble Lords will know, we set up the Pensions Commission in 2002 to examine the UK private pension system and the issue of long-term savings. Adair Turner and his colleagues published the second of their reports at the end of last year, making recommendations about the future shape of pensions. Contracting out is one of the most complex areas of pension policy, as the Pensions Commission recognised when it said that, were it to create a pension system from scratch today, it would not include contracting out. The commission made a number of recommendations in relation to contracting out, in particular that the contracting-out option for defined contribution schemes should be removed and that it should be phased out for defined benefit schemes by 2030. We have welcomed the Pensions Commission's second report as an excellent contribution to the ongoing debate.
	Our work reaches an important stage this spring, when we will bring forward a pensions White Paper setting out the Government's proposals for long-term pension reform. I have no doubt that noble Lords will question me about this, but the decision that we have taken in relation to rebates has to be set fully and squarely in the context of our current deliberations on the Pensions Commission recommendations. I am satisfied that the order is compatible with the European Convention on Human Rights, and I commend it to the House. I beg to move.
	Moved, That the draft order laid before the House on 1 March be approved [20th Report from the Joint Committee].—(Lord Hunt of Kings Heath.)

Baroness Noakes: My Lords, I thank the Minister for introducing the order. I would like to say that we welcome it, but I cannot. This mean-spirited order is unhappily all of a piece with the Government's cavalier approach to pensions in the private sector. The Government have done nothing good for private sector pension provision in the past nine years. They have virtually demolished private sector defined benefit provision, starting with the ACT raid. As pension schemes started to fail, the Government responded at speed to create a new category of preferential debt on company balance sheets via the Pension Protection Fund, which would be better named the government protection fund. The combined weight of funding the PPF and the powers of the new regulator is today threatening the economic viability of some businesses. The pensions tail is in too many cases wagging the wealth-creating dog. At the same time, the Government have been dilatory and mean about the amount of money available to and distributed by the Financial Assistance Scheme.
	The Government have also presided over a collapse in private savings, and this week's Budget has done nothing to reverse that. The Chancellor's bid to make a majority of pensioners dependent on means-tested benefits has produced yet more disincentives to save, and the savings credit has muddied the waters still further. But the Government have gone to great lengths to protect public sector defined benefit provision and, in the case of judicial pensions, they have gone to extraordinary lengths to protect the enhanced benefits of a privileged few.
	It is necessary to paint that background before we move to the narrower territory of today's order. I have always regarded contracting out as one of the more arcane areas of pension provision, and so it is in the detail. But the big picture is that, through contracting out, the Government achieve a transfer of liabilities and risk from public funds to the private sector. In return for that transfer of risk, the Government pay the private sector via a system of national insurance rebates, so it is important that the price for that transfer is right. The Government say that the price for the next five years is to be 5.3 per cent with the reduced caps that the Minister explained, but no one else seems to agree with them.
	The Government Actuary has said that the rebate should be 5.8 per cent. The Government's decision to ignore the Government Actuary has been described by the actuaries Mercer as "the stealthiest of taxes"—and we have seen quite a few stealth taxes over the past few years, so that is quite an accolade. Actuaries Watson Wyatt have calculated that the new rebate will put another £1.5 billion of pressure on schemes, and another firm, Hymans Robertson, has calculated that £2 billion will be needed.
	The National Association of Pension Funds has noted that recent changes such as the introduction of the Pension Protection Fund have increased the costs of private pension provision and transferred additional risk from the Government. In that light, the NAPF believes that a fairer rebate level would be around 8 per cent rather than 5.3 per cent. The Association of British Insurers has pointed to the difficulty, which will be exacerbated by the new rebate levels, in advising employees whether to contract out or to remain contracted out. The ABI has particular concerns about the unattractive nature of contracting out for many more people than at present. It believes that contracting out should be a "win-win" for the Government, employers and employees, but it thinks that the new rebate level has destroyed that equation in many cases, especially for older people—"old" in this case being past the age of 43. For many over that age, with these new rebates, contracting out will be the wrong answer.
	The ABI has also challenged the use by the Government Actuary's Department of an equity risk premium in the calculations by the Government Actuary, because the ABI does not believe that it is correct to assume that an employee who contracts out should be more risk-tolerant than the average employee. It believes that actuarial neutrality implies the use of a risk-free discount rate. Indeed, the ABI goes further and suggests that the Government should build in a small premium for contracting out to simplify decision making for individuals.
	The Government have justified this order, which has the imprint of the Treasury all over it, on the basis of "cost neutrality", whatever that means. It certainly does not mean neutrality for occupational pension schemes. That translates as no short-term cost to the Treasury. This decision about the rebate should not be about protecting the Treasury; it should be about a fair recompense for the transfer of liability and risk.
	The fig leaf for this decision is the Turner review, which is doubtless a convenient way to avoid many awkward questions for a while. But that cannot be more than an excuse, as any changes post-Turner will take a long time to implement and are unlikely to have any impact for the duration of this quinquennial determination of the rebate rates.
	It is difficult to find questions to put to the Minister beyond the overarching "why?" Why are the Government doing this to the contracted-out rebate? Cost neutrality and fiscal circumstances are weasel words which have nothing to do with the honest operation of the rebate. If we do not get an honest answer today to the "why" question, perhaps the Minister will give an honest answer to a "when" question. We have to wait for the Government's response to the Turner report, which the Minister mentioned. He said the report would be available "this spring"—I think that I have quoted him correctly—but I understand that the phrase used in another place was "late spring". Will the Minister either say precisely when the report will be available or define when spring starts and ends?

Lord Oakeshott of Seagrove Bay: My Lords, it is good to hear the noble Baroness, Lady Noakes, in such fine ending form. By my calculation, she has handled nine orders today from the Conservative Front Bench; I have been a slacker with only eight. I say to the noble Baroness, "We can't go on meeting like this".
	I am sorry to say that we on these Benches cannot welcome the order either. As the Minister indicated, for contracted-out salary-rated schemes the rebate will go from 5.1 to 5.3 per cent. But, in its report to the DWP, the Government Actuary's department proposed that it should be set at 5.8 per cent. We then had the excuse that in the present fiscal circumstances—I would watch that carefully if I were the Government worrying about what someone is going to say or about inquiries in the future—and given the current consideration of pensions policy, the Secretary of State decided instead, unilaterally, to fix it at 5.3 per cent. So the Government are deliberately, and against their own professional advice, setting the rebate at a level below that which the Government Actuary's department thinks is necessary to give an equivalent benefit to the state pension given up. In these schemes, are the Government not mis-selling contracted-out pensions and does not the inadequate increase in the rebate compound that?
	The Association of British Insurers, to which the noble Baroness, Lady Noakes, referred, has a considerable interest in this matter and I think that its briefing is worth reading out in detail. It is important that noble Lords hear it because it tells us something about the nature of contracted-out rebates and their complexity. It states that,
	"the assumptions made by the Government Actuary, which underpin the rebate levels recommended by him, are not as robust as they should be in order to ensure actuarial neutrality. In calculating the pre-vesting net yield, the Government Actuary allows for an estimate of the Equity Risk Premium (ERP) expected for the period over which the rebates are invested. We strongly believe that the ERP should not be allowed for in calculating the rebate levels. It should not be assumed that the worker who contracts out is more risk tolerant than the average worker.
	In our view, actuarial neutrality implies the use of a risk free discount rate as represented by gilt yields . . . Consequently, rebates should be calculated using yields on gilts of durations which are appropriately matched to the term to State Pension Age".
	Is that quite clear, even at the back of the class? No, I did not think so. It just shows how eye-wateringly complicated that system and contracting-out are. It is a nightmare for ordinary people to decide whether to stay in the state top-up scheme or whether to stay out.
	The only solution is to strip away the current complexity. I say this to the Association of British Insurers as much as to anyone else. Of course, the association is right, as we are, to point out that within the existing system the Government should take proper professional advice. But they, among all people, should also see how hopelessly complicated and how rotten a system it is. As I said, the only solution is to strip away the current complexity surrounding it. Our proposal for a citizen's pension would ensure that a state pension was paid at a level that negated that need. That is also the direction of travel for Adair Turner. The state second pension would be phased out. I ask the noble Lord to pass on to his Secretary of State and to the Prime Minister our full support in their battle royal on pensions with Gordon Brown.

Lord Hunt of Wirral: My Lords, I strongly agree with the points raised by my noble friend Lady Noakes and the noble Lord, Lord Oakeshott. I should like to put three questions to the Minister which arise out of the discussion that we have just had.
	First, I should like to press him further on exactly what is so adverse about the "present fiscal circumstances" as to convince the Secretary of State not to accept the proposals from the Government Actuary? Secondly, have Ministers really thought through the impact that this decision is likely to have on various forms of pension and how that will interlink with their response to the Turner commission? Thirdly—the Minister has already referred to this—to what degree does he believe that the forthcoming White Paper might necessitate a further review of rebates?
	On the first point, in his report the Secretary of State states that,
	"in the present fiscal circumstances and given the current consideration of pensions policy outlined in the second paragraph to this report, I do not believe it would be appropriate to accept his recommendation"—
	that is, the recommendation of the Government Actuary.
	On reducing the cap from 10.5 per cent to 7.4 per cent he states:
	"I have now decided to change this to 7.4%, taking account of fiscal constraints".
	The Secretary of State has decided to pay rebates below the actuarially neutral level to defined benefit schemes and to individuals above the age of 43 in defined contribution schemes. So the cap for DC has, therefore, been reduced dramatically. Paying actuarially neutral rebates does not cost the Government money. It simply transfers, as my noble friend pointed out, an unfunded state pension liability to a privately funded one, in which case the only real impact of contracting out is going to be one of cash-flow.
	What exactly is so adverse about the current fiscal circumstances of the National Insurance Fund that the Secretary of State has deemed it necessary to disregard the advice of the Government Actuary and refuse to pay an appropriate rebate to, or on behalf of, potentially millions of individuals? Surely Ministers should have provided a fair deal on contracting out? Contracting out moves individuals from unfunded state pensions to privately funded pensions. This would appear to be in line with the Government's objectives for a number of straightforward reasons. In the light of spiralling unfunded public sector pension liabilities, measures to transfer future liabilities appear to be sensible. This rebate announcement seems to go against that logic.
	For defined contribution schemes, does the Minister accept that the vast majority of those above age 43 are likely to rejoin S2P? In the case of defined benefit schemes, where contracting in would require extensive structural change, does the Minister accept that this announcement may further accelerate the decline of such schemes? Surely the Government should be encouraging, not discouraging, privately funded pensions? Reference has already been made to the Pensions Commission's view that there should be changes to state and private sector pensions and to contracting out.
	On state pensions, the recommendation is to raise the state pension age. On contracting out, as has been pointed out, the proposal is to discontinue for DC schemes in 2010, and to phase out for DB schemes by 2030. I hope that the Minister will respond in greater detail to the very valid points raised from the Opposition Benches and explain why he and his colleagues believe that the White Paper in response to the Pensions Commission might prompt a further review of rebate levels?
	We have heard some interesting comments about the White Paper. I suppose one might almost say that in the spring a Minister's thoughts lightly turn to thoughts of a White Paper, but we do not know when exactly. My noble friend has rightly asked whether it is early or late spring. It is now early spring. I challenge the Minister to walk outside the Chamber where he will enter a spring environment. So where is the White Paper? It would be very helpful to have further, more definite information on that.
	It is interesting to note that, even when rebates had become clearly inadequate, Ministers opted not to exercise their powers of reviewing rebates earlier than the standard five-yearly reviews. Under the existing legislation we could have another review next year. It would be helpful if the Minister could give us further information on that. Is there really any justification for not going down that route and for allowing deliberations which will not bite until at least 2010 to influence rebate levels from 2007?